Epicenter

Covid must hurt stocks

Epicenter

Epicenter – Stocks with Uncommon Value During Uncommon Times

This list was published in the Daily BLAST dated February 12, 2020. We’ve republished it here in order highlight it for our valued subscribers.

STRATEGY: Updating Epicenter Trifecta List –> +21 new ideas (-10 deletions) or +11 net adds
The case for being Cyclically-tilted is strengthening:
– Vaccine rollout set to accelerate
– US cases collapsing
– US economy set to re-open
– US corporates reset cost structures = strong operating leverage
– US credit markets strong = cost of capital falling


We are re-balancing our “Trifecta” epicenter stock list. These are the stocks which were hit the hardest by the pandemic and have the greatest operating leverage to a re-opening.  And we like the earnings upside in these stocks, because of the massive cost reset.  The stocks are based on positive views coming from the trifecta of: (i) Quant (tireless Ken), (ii) Global Portfolio Strategy (Brian Rauscher, aka Rocky) and (iii) Technicals.  


The Epicenter Trifecta list is updated – 10 stock ideas are removed, and 21 stock ideas are added to the list… Now 121 stocks in the Trifecta list…
21 Additions:
Discretionary: RL, KSS
Financials: PACW, GS
Industrials: EAF, TTC, ITT, ALK, LSTR, MAN
Energy: XOM, BKR, HAL, COP, FANG, HES, MRO, MUR
Materials: IP
Real Estate: BXP, WRI


10 Deletions:
Discretionary: BBY, CRI, GPC, HAS, HOG, PHM
Financials: AGNC
Industrials: MMM
Real Estate: CPT, STOR



Below is the complete list of 121 Epicenter Trifecta list (*)…
Consumer Discretionary:
AN, GM, F, GRMN, LEG, TPX, TOL, NWL, MAT, PII, RL, MGM, HLT, MAR, NCLH, RCL, WH, WYND, SIX, DRI, SBUX, FL, GPS, KSS, LB, VFC

Financials:
FITB, WTFC, ASB, BOH, FHN, FNB, PB, PBCT, RF, STL, TFC, WBS, PNFP, PACW, SBNY, NYCB, MTG, EVR, GS, IBKR, VIRT, BK, STT, SYF, BHF

Industrials:
AGCO, OC, ACM, WAB, EMR, GNRC, NVT, CSL, GE, IEX, PNR, CFX, DOV, MIDD, SNA, XYL, FLS, EAF, TTC, ITT, ALK, DAL, JBLU, LUV, MIC, KEX, UNP, JBHT, R, UBER, UHAL, LSTR, MAN

Energy:
XOM, HP, BKR, HAL, NOV, SLB, COP, EOG, FANG, HES, MRO, MUR, PXD, XEC, HFC, MPC, PSX

Basic Materials:
LYB, EXP, MLM, CF, MOS, ESI, NEU, NUE, RS, SON, IP

Real Estate:
BXP, HIW, UDR, KIM, NNN, WRI, VNO, JBGS, RYN

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This image has an empty alt attribute; its file name is covid-19-update-usa-cold-snap-so-bad-it-is-3x-worse-1.png

Source: Fundstrat, Bloomberg

(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile.

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